The Secret Service and the Federal Trade Commission say “Identity theft is quickly becoming a legitimate threat to every American. It is the fastest growing crime in the United States”. Identity theft and credit fraud continue to cost billions of dollars and violate the privacy of millions of consumers every year. The FBI's Financial Report to the Public for 2007 reports fraud losses of $52.6 billion, affecting 9.91 million Americans. Fraudsters routinely steal consumers' personal information and then proceed to use this information to open new accounts and/or use existing accounts.
By the time a consumer realizes they are a victim of identity theft, it is usually too late as the charges have already occurred and the information has been reported to the credit bureaus. There are limitations and safeguards put in place by card issuers usually limiting the financial liability of an identity theft victim to $50 per card (which is often waived). The erroneous data reported to the credit bureaus has a negative impact on a consumers' ability to obtain new credit and can damage their credit score resulting in a much higher cost to borrow money. The victim will spend countless hours, often spanning months and years, attempting to undo the damages caused by the fraudster. They also have to perform the repair process with up to three credit bureaus. The cost and stress of repairing a consumer's credit history is undesirable and should be eliminated.
Today's current systems facilitating the credit process have many inherent weaknesses that continue to be exploited by fraudsters. New account creation and credit account authorization is a highly automated process that has no accurate way to verify the true identity of the consumer. When a card is lost or stolen, it remains active until the card holder notifies the issuer. The credit bureaus are based on historical data which is reported well after a transaction has been completed. Anti-fraud solutions are based on predictive analysis, which attempts to curtail fraud and at the same time, has to minimize false positives in order to protect the legitimate consumer transaction. Unfortunately, none of these systems can proactively stop fraudulent activity which is why identity theft and credit fraud continues to be a serious problem. The existing processes do not provide consumers with any ability to centrally control how, when, and where their identity and credit are used.